1. Notice of Default / Reinstatement Period
Foreclosure proceedings are initiated by recording a Notice of Default (NOD) in the county in which the property is located. This recording of the Notice of Default gives "Constructive Notice" to the public.
After the recording of the Notice of Default, in the state of California, the borrower and junior lien holders are given proper notification and the borrower has 3 months to bring their account current. This period is referred to as the Reinstatement Period. Many foreclosure proceedings are reinstated during this 3-month default period. The borrower or anyone with a subsequent interest in the property may pay the beneficiary or his authorized agent the amount necessary to cure the default.
This amount will include delinquent payments, and advances and the fees and costs associated with filing the notice of default and other necessary documents. When the default is cured, a Notice of Rescission will be prepared so that it can be signed by the beneficiary. When the Notice of Rescission is recorded it cancels the Notice of Default.
2. Notice of Trustee’s Sale
If after 90 days the borrower has not remitted the arrearages, the lender may authorize and instruct the Trustee to record the Notice of Trustee Sale (NOS).
After 21 days of the recording of the NOS, a foreclosure sale can take place at public auction. The property may be sold to a third party bidder or revert back to the lender for a specified amount.
Bidders are required to bring cashier's checks or money orders to the sale in an amount equal to or higher than the lenders opening bid. The auctioneer will qualify each bidder and the successful bidder will have to tender full payment at the sale.
The Notice of Trustee's Sale is recorded at the County Recorder's office in the County where the property is located. It contains the date, time and place where the auction will take place. This notice has to be published in an adjudicated newspaper in the county where the property is located. The NOS is also posted on the property as a requirement of law.
3. Disbursement of Funds
After the sale auction is completed and if the property sells to an outside third party bidder, all funds owed to the lender/beneficiary will be prepared for immediate payout. If the property reverts to the lender/beneficiary at the sale, a Trustee's Deed will be issued and the lender will have ownership to the property securing the debt.